Sun Pharma has announced that USFDA has granted approvals for two ANDAs, generic version of Eloxatin, oxaliplatin for injection and generic version of Imitrex, sumatriptan succinate tablets.
The company has also announced that it will share 180days exclusivity for generic version of Eloxatin. Oxaliplatin injections have annual sales of approximately $2.3 billion in the US.
Oxaliplatin is an anticancer used in the treatment of colon and rectal cancer. Patent on the Eloxatin is set to expire in CY2013.
We believe the news of 180 share exclusivity on Eloxatin is a positive surprise and could lead to 3-4% upside to our Target Price. However, at Rs1,206 the stock is trading at 19.4x FY2010E and 16.3x FY2011E earnings.
We recommend a NEUTRAL on the stock as we believe the US FDA issue is unlikely to get resolved soon and will impact the company’s US business (lower sales of distributed products and further inventory write downs) and would continue to be an overhang on the stock.